DoD Officials Hope for Flexibility If Sequestration Occurs

Dec. 12, 2012 - 07:38PM
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U.S. defense officials are still holding out hope that they might be given some flexibility on how to tailor spending reductions, particularly in weapon buying accounts, should sequestration go into effect next month, according to a senior defense official.

Some officials within the Pentagon are arguing that these cuts — mandated by the Budget Control Act — be made at the account level instead of the program level.

For example, that would mean a roughly 10 percent cut would be made to the Air Force aircraft procurement top line, instead of an even 10 percent from each individual aircraft procurement program.

A senior defense official argued on Dec. 12 that this would allow DoD officials to make tradeoffs within each section of the department’s vast budget.

The White House Office of Management and Budget has the final say on how the cuts are implemented. The defense official said DoD has yet to receive that level of guidance. Last week, OMB directed DoD to start planning for sequestration, which goes into effect on Jan. 2.

But getting that flexibility, particularly in the procurement and research-and-development spending accounts, is not likely, according to Gordon Adams, who oversaw defense budgets at OMB during the Clinton administration.

DoD would more likely get that kind of leeway within its operations and maintenance accounts, Adams said.

Military personnel accounts are already exempt from sequestration.

If the cuts are done at the program level, DoD will be in a pinch, particularly when it comes to multiyear procurement deals already on the books, according to the senior defense official.

Multiyear procurements where a quantity cannot be reduced, particularly in the case of shipbuilding and satellites, would likely be impacted because they often involve a single ship or satellite being purchased over a number of budget years.

In that case, DoD would need to make “fundamental changes” and might need to renegotiate the contract entirely, the official said.

The Pentagon will also look at reprogramming and are “going to try to get creative if we have to,” the official said.

Sequestration calls for about $500 billion in cuts to planned defense spending over the next decade, unless Congress strikes a deal to lower the U.S. deficit. The cuts break down to roughly $50 billion per year. However that number could be about $10 billion higher in 2013 since DoD is currently operating under a continuing resolution, which is based on higher-than planned 2012 spending levels.